Wednesday, March 26, 2008
"The "real economy" of spending, production and jobs -- though weakening -- is hardly in a state of collapse."
The currently scary possibilities and uncertainties are in the "shadow economy" of credit, securities, and markets. Since most of our financial media coverage is obsessed with Wall Street, not Main Street, we're hearing a lot more about these new financial instruments which nobody really understands, and less about the bread and butter. Hence this talk about the Great Depression, which is an economic equivalent of Godwin's law--dragging Nazis into a political conversation. An extremist analogy that grinds intelligent thinking to a halt.
But I think there's another level of factors we should be paying attention to, that does have to do with the "real economy," that is pretty scary. I'm talking about the two-decade, unsustainable trend of stagnant household earnings and increasing household debt. Consumer spending can't recover unless wages go up and people are able to pay down debt. But wages tend to go down in economic climates like this one. And borrowing more to get out of this mess
is just plain unsustainable.
Tuesday, March 25, 2008
Yet it has to be said that TV is generally a low-information medium. There's nothing like it when there's true breaking news--election results are coming in or there's a big natural disaster. But if you watch for an hour on a slow news day you might learn that a bus crashed somewhere in Venezuela, and that bacon is bad for you. I haven't owned a television for three years, and I get most of my information from print, sometimes radio. So I'm ambivalent about appearing on TV, and I hardly ever watch my clips, as the pros do. I hate the feeling that I'm essentially a spokesmodel for the various businesses with which I'm professionally associated.
I was the youngest guest that night by about 10 years. Somebody in the green room asked me if I was Arianna Huffington's assistant (she was there to talk about politics).
Our brief was simply to talk about stocks vs. real estate. But as readers of my blog and book know, I'm extremely worried about what's going on with the economy. I think the recession may be very grave and destabilizing. Americans have to change their behavior, especially around debt. But average Americans have been spending beyond their means simply to afford middle-class basics like housing, health care, and education. If they can't borrow any more, our quality of life is truly going to suffer.
Meanwhile, rising energy costs and climate change demand that the energy industry, which is the largest single concentration of capital in our economy, must move away from the importation of fossil fuels. This is going to cause huge economic upheaval all by itself.
One important part of the solution is democratic government action. We, the people, must rewrite the rules of the market, to limit environmental degradation, the unregulated speculation that has brought our financial system to the brink of ruin, and the concentration of wealth. The market and the corporation are not people--they are not born free. They are instruments that serve at the pleasure of the people, by the rules we set, for the benefit of everyone.
We also need to strengthen the social safety net and transform our infrastructure. Historically, these are tasks that only government can accomplish, whether on the local or national levels.
I didn't get to say all of this on TV, of course. But the wonderfully kind Wolf Blitzer did give me an opening to say a piece of it.
After devoting most of the segment to the three other panelists, he tossed me the last question. "Are you optimistic, Anya?"
I took a deep breath. "I think I'm going to optimistic when I vote in November, that there's going to be a different set of policies out there that change what happens to the economy for ordinary people.
BLITZER: You think whoever's elected can make a difference?
KAMENETZ: I think we're at the end of market fundamentalism and that we're in the beginning of people who believe in government solutions to some of these problems.
BLITZER: You don't trust the private sector, the markets?
KAMENETZ: Did you see the news today?
BLITZER: You obviously don't.
KAMENETZ: I think that there's a much larger role that the federal government can take on behalf of ordinary people's incomes.Thanks, Wolf! I had a great time. I hope you didn't regret it.
Thursday, March 20, 2008
"This chart shows something surprising…an enormous acceleration of borrowing starting in 2000, which didn’t let up until very recently. The solid line is the actual ratio, and the dotted line is where debt would have been if people had kept borrowing at roughly the same as in the 1990s. The difference between the two…roughly 25% of GDP in 2007…is the amount of extra debt.
So by this calculation, there is $3 trillion of extra debt that are weighing down households. That’s why the financial crisis has prove so hard to solve. The real scope of the problem is not subprime mortgages, but rather this $3 trillion extra debt."
Tuesday, March 18, 2008
Shadow problems: precarious, overcomplicated and interconnected investments like mortgage-backed securities; globalization of markets increases volatility.
The problems that directly affect both: overconfidence in housing prices, overreliance on credit.
Real-people problems: stagnant wage growth, increasing instability in job market, lack of health benefits, rising cost of education, deteriorating infrastructure, environmental and resource degradation, inflation in energy and food costs.
From How the World Works:
" The exotic troubles experienced by Wall Street's investment banks right now are a direct consequence of the housing bust and the subprime collapse and all the funny-money machinations with complex financial instruments that have now definitively been proven to be fool's gold. How that distress intersects with high oil prices, high food prices, increasing stress in labor markets and other economic ailments much more familiar to the working man and woman is a narrative whose plot is just beginning to thicken."
One aspect of the narrative is that unfortunately, rich people's problems tend to get more attention, because, as Krugman puts it, "When push comes to shove, financial officials — rightly — aren’t willing to run the risk that losses on bad loans will cripple the financial system and take the real economy down with it."
Krugman again (last week):
I used to think that the major issues facing the next president would be how to get out of Iraq and what to do about health care. At this point, however, I suspect that the biggest problem for the next administration will be figuring out which parts of the financial system to bail out, how to pay the cleanup bills and how to explain what it’s doing to an angry public.
Monday, March 17, 2008
Wednesday, March 12, 2008
"In making the argument for urgent action, you point to the six trends that are shaping this century: economic convergence, or the rapid growth of developing countries; rapid population growth, despite broadly shared declines in fertility, with the poorest countries set to experience the most rapid increases; the rise of Asia; urbanization; a looming environmental disaster, as humanity appropriates for its use an ever-rising share of global resources; and the tumbling of at least 1 billion people into a "self-reinforcing poverty trap."
"In particular, you stress the need to secure four high-priority global goals: first, "sustainable systems of energy, land and resources use that avert the most dangerous trends of climate change, species extinction, and destruction of ecosystems"; second, "stabilization of the world's population at eight billion or below by 2050 through a voluntary reduction of fertility rates"; third, "the end of extreme poverty by 2025 and improved economic security within the rich countries as well"; and, finally, "a new approach to global problem solving based on co-operation among nations and the dynamism and creativity of the nongovernmental sector."
Agree, mostly. I disagree that extreme poverty defines this century as opposed to every other century in human history. I don't think the future of the planet depends on the eradication of poverty or world peace, not the same way as it depends on sustainability. If it does, I don't think we're going to get there before the Messiah.
Tuesday, March 11, 2008
"Not that I'm announcing my support for anybody, but I'm impressed that Obama got this close to being a nominee just being part African-American. There's a part of me that looks at that and says, "Damn, we're getting healthier on some things." Now, is Obama any more able to address the fact that we're a money-obsessed oligarchy and not a democracy? I don't think so.
I think for change to happen on a level that actually affects the structure of that oligarchy, a lot of distressing things will have to happen, and more people are going to have to suffer a great deal more. More struggle for the working class, and the middle-class is going to have to be marginalized. Wages will have to go a lot lower, the recession will have to go a lot deeper -- and I think we're in a recession and headed for some bad economic times. I think it's going to have to go a lot deeper."
Wednesday, March 05, 2008
Both Hillary and Obama support cap-and-trade with auctions, says Brendan Koerner of Slate, and the essential environmental mantra "80 by 50" (80% reductions of CO2 below 1990 levels by 2050), at least in theory. "Clinton's plan is a little better on nitty-gritty details," he writes, such as "Connie Mae," a new federal agency to build green homes.
On the other hand, says How The World Works, when it comes to Big Oil campaign contributions, "Of candidates still left in the race, Hillary Clinton ($267,150) edges out John McCain ($229,685) for first place. Barack Obama is third, having only raised $128,290. Ron Paul raised $84,438; Mike Huckabee, a paltry $51,600."
Tuesday, March 04, 2008
Last week, I read with interest this glowing New York Times profile of Margaret B.Jones, a single mom who has just published a memoir about growing up a foster child in tough, gangland South Central. The piece hinged on the contrast between Jones' current tranquil, extended-family-of-friends life in a nice four-bedroom house in sleepy Eugene, OR, and her traumatic background of violence and death in LA, which she portrayed in the book with an unusual vividness and compassion that the writer hinted was essentially feminine.
"Unlike several other recent gang memoirs, all written by men, Ms. Jones’s story is told from a nurturer’s point of view. Along with grit and blood, every chapter describes tenderness and love between people as well as the rites and details of domestic life."
Well the story wasn't just nice and readable because it was by a chick. It was readable because it was TOTALLY FALSE, and it was accessible because it was written by a white person who went to private school, grew up with both parents, and knows these stories only through her friends that she met at Starbucks.
Hmm. I used to hang out in independent coffee shops in high school (before New Orleans had Starbucks). I was friendly with a lot of colorful characters, like a gutter punk named Nacho and a bunch of semi-itinerant musicians and drunks of various backgrounds. Does that mean that I understand the shit that they went through every day? Absolutely not.
As a journalist who has wrestled with--and been criticized for--issues of representation and identity in my own work, (can I really claim to speak for the most burdened members of Generation Debt, etc) I feel like it's the duty of all conscientious writers to call out not only this troubled woman, but the entire publishing industry, for an act of brazen cultural appropriation. This woman outright stole the identities of poor people of color and packaged them into an attractive story that the New York Times swallowed hook, line, and sinker.
Related: Undercover Black Man: Fucking liar
Monday, March 03, 2008
2) "The world's food situation is bleak...The world has faced periodic bouts when it looked as if population growth would outstrip the food supply. Each time, food production has grown to meet demand. This time it might not be so easy.... mass starvation."
A rather unsettling phrase to read over your morning coffee: mass starvation. We have to stop subsidizing intensive crop biofuels, cut back on meat consumption, and seriously consider broad-based individual permaculture, aka edible landscapes. And it still might not be enough to feed everyone, because the Green Revolution of the 1960s depended on petroleum-fueled farm implements and petroleum-based fertilizers; see 1). (I've heard various reports on organic productivity; I know that animal-powered farms exist, but no one makes extreme claims about their yields per acre. Fuel cell tractors, anyone?)
This is the third time in the last few weeks when I've been startled not by the facts I'm hearing, but by the relatively mainstream source. (The other times: hearing the heads of large energy and chemical corporations at last week's Carbon Forum admit how screwed the environment is, even as they outline how they'll fight for the right to continue to bleed the world dry; and this article on how America may be on the brink of revolution.)